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Source: Rick Munarriz

Dips are fun on Disney (NYSE:DIS) coasters, and apparently one analyst thinks that dips can be fun as buying opportunities, too. Hilliard Lyons analyst Jeffrey Thomison upgraded shares of the family entertainment giant yesterday.   

It's not much of a ratings boost. He is raising his rating to buy from long-term buy. The price target that he's establishing -- $113 -- is actually 7% below where Disney stock was when it peaked earlier this month. 

Like most Wall Street pros he's concerned about the sluggish performance at ESPN and Disney's other media properties, but he feels that there's something to be said about Disney's ability to monetize its content and programming across new streaming TV platforms. The contractual increases for couch potatoes that decide not to cut the cord will also help soften the sting of defectors.

However, when you consider that Disney stock peaked three weeks ago today just north of $122, it's hard to get excited about a $113 price goal.

Beggars can't be choosers, of course. Several analysts have slashed their price targets on Disney over the past three weeks. Wells Fargo, Bernstein, and Jefferies have all downgraded the stock since the media giant's disappointing fiscal third quarter results were posted on Aug. 4.

Wall Street isn't worried about Disney's theme parks, one of the many segments that should benefit from the recent plunge in gas prices. Analysts also aren't particularly concerned about the state of Disney's studio arm. If your pipeline of movies included Star Wars: The Force Awakens you wouldn't be losing a lot of sleep about that, either. The one thing that was weighing on every downgrade and target price cut is the slowdown at Disney's media networks division.

Cord cutting is real, and we're seeing it in a decline in homes subscribing to ESPN and a drop in ratings at ABC. The media network division currently accounts for nearly half of Disney's revenue and a little more than half of its operating profit, making this a pretty big problem for a company that usually has so many moving parts that it can do just fine if it's not firing away on all cylinders. Record attendance at its theme parks and upcoming Lucasfilm, Marvel, and Pixar movies should keep overall growth moving in the right direction in the coming years, but how much of that growth will be weighed down by the assumed weakness on the media networks front?

It's naturally welcome to see any kind of upgrade on Disney. Yesterday's positive update after three weeks of bar lowering on Wall Street is refreshing. It may not have been the most bullish of endorsements, but until we get a clearer snapshot of how the cord cutting revolution will play out for ESPN, Disney Channel, ABC Family, and ABC it's hard to imagine Wall Street pros storming back into the bullish camp en masse. Maybe they'll change their tune a quarter from now as record theme park attendance and Star Wars buzz play out, but for now Mr. Market is blinking amber on the House of Mouse.

Disney has a lot to prove here, but at least one analyst is chiming in to let the market know that Disney's worth the ride beyond this month's dip. After a rough few weeks, that's a start.

 

Rick Munarriz owns shares of Walt Disney. The Motley Fool owns and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.